Daily Management Review

Japans’ SoftBank To Jointly Operate Oyo Business In Latin America: Reuters


Japans’ SoftBank To Jointly Operate Oyo Business In Latin America: Reuters
According to the head of Oyo Brazil, Japan’s Softbank Group will get involved in a direct role in the management of its hospitality startup Oyo’s operations in Latin America amid the novel coronaviorus pandemic hit to the travel and tourism industry. For this purpose, a joint venture will be formed that will take charge of all Oyo hotels in the region.
Investment in the newly formed company called Oyo Latam will be made from the $5 billion Latin America fund of the conglomerate. Henrique Weaver said that the joint venture will be taking over 1,000 hotels mainly in Brazil and Mexico. Softbank is the largest investor in Oyo.
The board of the joint venture will have equal representation from both the companies, Weaver said. However the amount of investment that SoftBank plans to make in the joint venture was not spelled out by him.  
Value at $10 billion in its most recent fundraising round, in recent months Oyo has been trying to reduce its costs and slow down its expansionist strategy in global markets through reduction of its hotel footprint and laid off employees following its revenue being hit severely by the pandemic.
This move from SoftBank shows the intent of the Japanese firm to ensure that the Indian company remains on track. This move also indicates a greater role being played by SoftBank in close management of the operations of Oyo in markets including China, India and Japan, claimed a report published by the news agency Reuters quoting three sources familiar with the matter.
The comp[nay has been forced to take on losses and large writedowns because of poor performance of some of the tech companies that it had invested heavily in including the likes of the shared office space company WeWork. The Japanese firm does not want a repeat of the same with Oyo. More than $1 billion has been invested by SoftBank in Oyo, said the report quoting one of the sources.
No official comment from Softbank was available. 
SoftBank is no different from any other investor of Oyo and has a seat on the board and Oyo is “a management-run and a board-governed company”, an Oyo spokeswoman told Reuters. “Any description that Oyo is being managed, or there is any ‘additional oversight’ (formal or informal) or otherwise is merely media speculation and completely untrue,” the spokeswoman said.
After having set up association with Oyo in Latin America in 2019, the investment that SoftBank has made in the company for the region was recently formalized with the creation of Oyo Latam and the board, the Japanese investment form said.
According to source information, an investment of $75 million into Oyo’s business in the region was made by Softbank’s Latam fund.
“Latin America has proved to be a good fit for Oyo, with a super fast growth pace because the hotel market is extremely fragmented in the region,” Weaver said.